UK banks increase lending to households in final quarter of 2012, BoE reveals

POSTED: 3rd January 2013

IN: Personal News

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The latest Credit Conditions Survey from the Bank of England (BoE) has suggested personal mortgages were more widely available in the last quarter of 2012.

According to the BoE, lenders revealed a "significant increase" in the amount of funding that was on offer to the secured households sector in the final three months of last year.

It is believed the government's Funding for Lending Scheme (FLS) was the main driver behind the rise in available credit as banks and building societies took advantage of the initiative to improve borrowing for British homebuyers.

Launched by the BoE and HM Treasury last July, the FLS is aimed at making access to bank credit easier so that homeowners can continue their journey up the property ladder.

As the Financial Times recently reported, Aldermore is among the top five lenders registered with the FLS ranked by the amount they lent to households and companies in the third quarter of 2012.

The Bank's stock of loans to the UK economy was worth around £1.6 billion in June, marking a significant feat for a financial institute that was established three years ago.

According to the BoE survey, the rise in credit availability was spread wide across borrowers at loan-to-value ratios above and below 75 per cent, with some lenders reporting an increase in funding to first-time buyers.

It is expected that the availability of secured credit will continue to increase in the first quarter of 2013, with the BoE claiming some lenders will have more appetite for risk.

The reduced cost of funds and greater risk taking also helped to encourage a slight lift in unsecured credit made available to households.

Although an increase in demand for house purchase and remortgaging is expected for this quarter, some lenders reported they would be tightening credit scoring criteria slightly.

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